Rupee becoming sr citizen - an economic issue described by non economist

The fall in Indian rupee which has been steepest in the decade has been very exposing and warning signal to the economic policy being followed over last two decades. Though it has not been a isolated phenomenon but 9.1% fall in second quarter has left many  person pondering on why this is happening at a fast pace and what is going to happen next. The other asian currencies like bhat , peso, won, singapore doller , malysian ringgit have also lost 5.8, 5.6, 2.7 , 1.9 and 2.5 percentage respectively during the same time but rupees slide has been the steepest. Many of the well known columnist and big economist are putting it aside as a short term phenomenon, but as a commenteter  and primary student of economics , to me, this needs deeper thoughts.If our economy is so brittle that a statement of  Fed Chairman Ben Bernanke that the central bank may moderate the pace of quantitative easing later this year and end the stimulus by mid-2014 , can lead to such a fall,then it is leaving us very vulnerable.

 The economists are attributing it to the withdrawal of U.S. stimulus Programme in wake of strengthening of their economy and  China's cash crunch, there is bigger question on how long our economy will be so much dependent on US economy. In pure economics theory, America's have been   printing billions of dollars after the economic crisis which means more liquidity and hence should have lead to inflation there but reality is that no inflation resulted. May be a weak Europe economy and not so good emerging markets have still kept the faith intact in US treasury but Where these money has gone? obviously, it has been routed to emerging markets like India. But was is it in form of FDI? No, mostly FII which is a easier route to fly back. Even in those conditions , Indian economy is not thought to be attractive as investment destination because of the basic weakness in the government policy which has not been able to tap this easy opportunity. The Indian currency suffered from more outflows than other emerging Asian currencies in the recent global markets rout due to worries about a record-high current account deficit as well. Our energy import bill is a known issue, but why do we import so much of gold and why govt is doing so little on this front. Neither, their is effort to do something extraordinary on the energy side nor there is effort to discourage people from putting their money in dead asset like gold. Last Friday, finally govt woke up to do something on gas pricing to give some impetus to increase domestic production. But this cannot be a very long term solution as we cannot meet our consumption from only domestic production. We need alternate solution . By giving easy money to the people in form of  energy subsidy, we are not only straining the fiscal deficit and hence lesser money for infrastructure development, it is leading us to do more borrowing and the result is inflation. The key is how do we control this populist political economics which is indirectly influencing the health of the country. We need more money to go into infrastructure project and less on importing the oil and subsidizing to get votes. 

why we are not able to attract the FDI in the core sectors? Why the govt doesn't have policy to improve the manufacturing base?  The reason for current account deficit is not only import but less export also. Even after so many years of economic liberalisation having taken roots, we have not been able to do much on manufacturing. Only sector which has done something is service sector, especially the software export and BPOs. They could flourish because they didn't need govt support and our country had some inherant strength to do well in these sector. However, the area such as manufacturing which essentially needs skill development,  infrastructure, proper govt statutory and taxation environment has not got any support . The result is we hardly do any export of manufactured goods other than clothes and gems &jewElaries   and heavily import most of the engineering and electronic equipment from abroad. This brings  much pressure on the currency. we need to make our fundamentals strong like Korea and do drastic changes in enabling manufacturing led growth otherwise just on mere speculation  of unrealistic return from Us treasury, the money market will behave erratically bringing more strains to the exchequer and we continue to struggle in the vicious cycle of high fiscal deficit, low growth, high inflation, high current account deficit and ultimately a poor country.

"It's a man made disaster or nature made? -

"It's  a man made disaster or nature made? - lot of uncomfortable visuals in media, many questions but do we have the answer? sure many explanations . I am not a environment expert but have little to say. I happened to be in UT just a day before this catastrophe happened and should thank lord from providing me a little sense to come back and not continuing with the original plan otherwise, I might have been also languishing in some lap of God waiting for the Demi earth gods to come and rescue. Now,when I seat and imagine what I saw in mad tourist rush, there is little doubt the present Himalayan disaster is man-made. The Himalayan watersheds have witnessed unprecedented deforestation for long and forest areas have been diverted for a host of activities including agriculture, urbanisation and infrastructure projects such as hydropower. Curiously, I found out from some internet sources is that the total forest cover in the Indian Himalayas will be reduced by 32% (of the value in 1970) by 2100. This was quite visible everywhere. Forest were being cut to make double lane highways, uncluttered hotels, restaurants and everything else which is just to destroy the calamity. Even the most basic class room teaches that forest slow down the speed of rain and prevent soil erosion - the precursors of landslides and floods. Besides, vegetation by evapotranspiration stops nearly 30-40% of rainwater from falling to the ground, thereby significantly reducing run-off. Writing was on wall everywhere, but aren't we all avoiding these just thinking I am not going to be the one gone be effected. Himalayan ecosystems had been throwing warnings in past few years, we can expect faster melting of glaciers; frequency of floods in Himalayan rivers will only increase in the coming years. I could see big billboards everywhere : "plots available, you can have holiday homes " . Aren't we playing with nature? Expanding human settlements and urbanization are vulnerable to extreme hydrological events in the Himalayan watersheds. We cannot stop tourism as source of income for locals and joy for outsiders, but aren't some one should think on how to control this uncontrolled human influx in the name of rising religious pilgrimages, consumerism, bigger spending power of the general masses. The mountains which were the source of spiritual carnation have transgressed into massive congregation of neo rich and unmindful individuals. While one cannot undermine aspirations of the local people and their economic activities, lack of enforcement of land use control laws on the part of local governments and officials cannot be wished away. Use of reinforced cement concrete and replacing traditional wood-stone masonry in the Himalayan highlands are likely to induce the heat and will definitely has impact on regional temperature. where is the balance between growth and peace? add to it is mad rush for hydropower. One doesn't need to be a civil engineer to predict the result of making 70 dams in this region. These are easily the potential sources of land degradation, slope weakening and destabilization. Most downstream damage in floodplains is caused by dams and barrages, which release large volumes of water. Huge people influx has necessitated construction of new roads and their widening, a direct reason for landslides. While I drove down the mountain, everywhere one can see cheap accommodation have mushroomed alongside river banks where Neither laws of construction science nor civil regulations have been followed. The result is the washing away of such buildings. Who is going to control it? if we not , such things will continue and days are not far off when even much bigger disasters will follow. We must comprehend the limits of the carrying capacity of Himalayan ecosystems. Controls and law enforcement across the board are a must. Can this be left to the political will? No, this is hardly there in this country. Geology and ecology is alien word for them. the locals, NGOs, self help group needs to come up. we need to get over the greed and bring some sense in the madness. I saw a news being flashed,where a big political lady explaining the reasons for this disaster - "because Devi temple was moved to create space for a dam, Lord shiva got angry and has let this turmoil to happen." Well, those with religious bend might agree in unison, but can that be cause? It's a man made disaster , nature has only reacted. High time we all should stand together to save our spiritual land. Economics doesn't augers well for the humankind especially in these areas. ....... Prakash"